This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Intel Facing Critical Month, Says Analyst

Overall, the weak consumer PC sales are a reflection of the poor economy, according to Wang.

Advanced Micro Devices (AMD - Get Report), Nvidia ( NVDA ), Marvell Technology (MRVL - Get Report) and LSI (LSI) are major Intel rivals that could also be affected by the weaker-than-expected consumer PC demand, Sterne Agee's Rakesh said.

And it could be most painful for rivals such as Nvidia and LSI, given their consumer-focused products.

Williams Financial analyst Cody Acree pointed out that "they're less enterprise-based ... so if you're getting a shift mix to corporate markets, especially where your [average selling] prices are typically higher, it's a double hit to those firms that are consumer-levered."

Acree said the impact on Intel from the weaker consumer PC markets will not be as bad as long as corporations are still running with relatively aged technological infrastructure and require upgrades -- which they can currently afford to do. According to Acree, "we're seeing the healthiest corporate balance sheets in many years ... cash-rich companies with little debt."

Intel's expectation for third-quarter gross margin is now 66%, lower than the previous expectation of 67%, but analysts said that 66% is still "hot."

"Sixty-six percent is an amazingly high gross margin for chip company," said Wang. He said the company's strong product mix is helping to keep margins in the ball park. Meanwhile, Roth Capital Partners' Arnab Chanda said 66% is close to an all time high and "very impressive."

Acree calls the 66% figure a "hot number. He would be concerned however, if Intel's gross margin figure had dipped to 56% due to a double-dip recession and other factors. "If things slow down, you end up having the same overhead but not the same revenue, so that changes margins very quickly if you're a manufacturing company with very expensive overhead factories." Intel controls its own manufacturing, Acree pointed out.

Currently, Gleacher's Earl Hege, Rakesh and Chanda are among analysts who don't believe Intel's lowered guidance will have a big impact on the company's bottom line. Chanda said he doesn't see a "catastrophic impact on EPS."

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.

>To follow the writer on Twitter, go to Andrea Tse.

>To submit a news tip, send an email to:

Get more stock ideas and investing advice on our sister site,

Follow on Twitter and become a fan on Facebook.
Copyright 2010 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
LSI $0.00 0.00%
DELL $0.00 0.00%
AMD $3.74 5.35%
INTC $30.61 1.09%
HPQ $12.12 -1.22%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs